Mil­lion­aires every­where

Herald Sun - Property - - COVER STORY - PETER FARAGO

THE line mark­ing the spread of Mel­bourne’s mil­lion dol­lar sub­urbs has moved east and north in 2015.

Fif­teen sub­urbs stretch­ing from Tem­plestowe to Hamp­ton East and in­clud­ing the hotspots of Box Hill and Glen Waver­ley are among 25 sub­urbs where the me­dian value has passed $1 mil­lion in the past year, new fig­ures from property an­a­lysts CoreLogic RP Data show.

De­mand for in­ner city liv­ing has pushed six sub­urbs just north of the city into mil­lion dol­lar ter­ri­tory.

Mt Waver­ley has had the strong­est growth, with the me­dian value ris­ing nearly $300,000 to $1.16 mil­lion in the 12 months to Au­gust 2015.

The trend con­firms ob­ser­va­tions dur­ing spring that a rip­ple ef­fect is driv­ing val­ues as buy­ers seek to es­cape ris­ing prices closer to the city, but also points to in­vestors and de­vel­op­ers spec­u­lat­ing on Asian de­mand.

Har­courts Judd White di­rec­tor Dex­ter Prack said there was a buy­ing “frenzy” be­tween Jan­uary and June around Glen Waver­ley, where the me­dian value in­creased to just over $1 mil­lion, while ven­dors expectations took off.

“I’ve never seen a mar­ket like it where ev­ery auc­tion had five or six bid­ders, big crowds and as­tro­nom­i­cal re­serves where we as agents were get­ting it wrong,” Mr Prack said.

“We were listing prop­er­ties at $1.6 mil­lion to $1.7 mil­lion and they were sell­ing at $2.2 mil­lion to $2.3 mil­lion.”

Mr Prack said the school zones re­mained the strong­est at­trac­tion to the area, but spec­u­la­tion on apart­ment re­zon­ing and lux­ury homes tai­lored for the Asian mar­ket were also driv­ing val­ues.

While the strong­est price growth was con­cen­trated around cen­tral Mt Waver­ley and Glen Waver­ley, it set off a rip­ple ef­fect through­out sur­round­ing sub­urbs, in­clud­ing Bur­wood, he said.

Mr Prack said once the $2.5 mil­lion to $3 mil­lion price bar­rier was bro­ken for a brand new home in Glen Waver­ley, de­vel­op­ers and in­vestors be­gan to push the price of older homes on sub­stan­tial blocks.

But ven­dors still look­ing to take on the mar­ket had missed the boat, he said.

“Ven­dor expectations in­creased ex­po­nen­tially with the mar­ket. When the mar­ket in­creased, ven­dor expectations in­creased, which is why we’ve got a lot of pass-ins,” he said.

Mr Prack said the mar­ket had ta­pered off in spring as more prop­er­ties hit the mar­ket, giv­ing buy­ers more choice and the abil­ity to be cau­tious at auc­tions. Some prop­er­ties were pass­ing in with­out a gen­uine bid, only for buy­ers to make later of­fers, he said.

The most ex­pen­sive en­trant to the mil­lion dol­lar club is Fitzroy, where CoreLogic RP Data es­ti­mates the value at $1.161 mil­lion. Fitzroy leads a clutch of in­ner north sub­urbs to climb into seven dig­its, in­clud­ing Carl­ton, Clifton Hill and Brunswick East, where buy­ers are seek­ing in­ner city ex­pe­ri­ences like trams, cafes, restau­rants, cul­tural ac­tiv­i­ties and prox­im­ity to the city.

Nel­son Alexan­der sales di­rec­tor Arch Staver said the in­ner north had been knock­ing on the mil­lion-dol­lar door for sev­eral years but the spread into Brunswick East had come ear­lier than ex­pected.

“Brunswick East ar­rived in a pretty spec­tac­u­lar fash­ion more re­cently as a $1 mil­lion sub­urb,” Mr Staver said. “Once upon a time, where a buyer would fo­cus on Fitzroy or Carl­ton North, there’s a will­ing­ness to move across to Brunswick East.”

Buy­ers were look­ing fur­ther afield for af­ford­abil­ity.

“Peo­ple are be­ing pushed out be­cause what they are buy­ing in Brunswick East would cost then an ex­tra $200,000 in Fitzroy,” he said. “It’s the pur­suit of value and iron­i­cally, the pur­suit of value creates higher prices and erodes value.”

Other new en­trants in­clude Prahran, Essendon and Wil­liamstown.

CORELOGIC RP DATA PRO­VIDES AU­TO­MATED PROPERTY VAL­U­A­TIONS TO THE BANK­ING AND IN­SUR­ANCE IN­DUS­TRY, COM­BIN­ING SALE PRICES WITH A RANGE OF DATA IN­CLUD­ING NUM­BER OF BED­ROOMS AND LAND SIZE. ME­DIAN VAL­UES ARE BASED ON THE MID­DLE VALUE OF EACH SUB­URB

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